RBI Issues KCC Directions for Commercial Banks

The Reserve Bank of India (RBI) has issued the RBI (Commercial Banks – Kisan Credit Card Scheme) Directions, 2026 to provide a revised framework for loans sanctioned under the Kisan Credit Card (KCC) Scheme by Commercial Banks.

The Directions will apply to loans sanctioned under the KCC Scheme with effect from 01 January 2027.

1. Applicability of the Directions

The Directions are applicable to:

• Commercial Banks; and
• Loans sanctioned under the Kisan Credit Card Scheme on or after 01-01-2027.

The revised framework seeks to strengthen access to agricultural credit and provide greater flexibility in determining credit limits for farmers.

2. Flexible Credit Limits for Marginal Farmers

A key feature of the Directions is the introduction of flexible credit limits for marginal farmers.

Under the revised framework, banks may sanction credit limits ranging from:

₹10,000 to ₹50,000

based on their assessment of the borrower’s requirements.

3. Credit Limits Not Linked to Land Value

The Directions provide that the credit limit for marginal farmers shall be determined without linking it to the value of land holdings.

This approach is intended to facilitate greater financial inclusion by enabling access to credit based on actual farming requirements rather than land ownership value.

4. Credit Assessment Based on Agricultural Needs

Commercial Banks are required to determine the credit limit by considering:

4.1 Crop Cultivation Requirements

• Type of crops grown;
• Cropping pattern; and
• Cultivation-related working capital needs.

4.2 Post-Harvest Credit Requirements

• Warehouse storage-related financing needs; and
• Other post-harvest credit requirements.

4.3 Farm-Related Expenses

• Cost of agricultural inputs;
• Farm maintenance expenses; and
• Other eligible farming-related expenditures.

5. Objective of the Directions

The Directions seek to:

• Improve access to institutional credit for farmers;
• Provide flexibility in determining credit limits;
• Reduce dependence on land-value-based lending;
• Support cultivation and post-harvest financing needs; and
• Strengthen the implementation of the Kisan Credit Card Scheme.

6. Expected Impact

The revised framework is expected to enhance credit accessibility for marginal farmers by allowing banks to assess credit requirements based on actual agricultural activities and expenditure patterns. The measure is also likely to facilitate timely availability of credit for cultivation, storage and other farm-related needs.

7. Key Takeaway

RBI has issued the Commercial Banks – Kisan Credit Card Scheme Directions, 2026, applicable to loans sanctioned from 01 January 2027. The Directions introduce flexible credit limits ranging from ₹10,000 to ₹50,000 for marginal farmers, with limits to be determined based on crop cultivation, post-harvest storage requirements and other farm expenses, rather than the value of land holdings.

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